Argentina's Financial Collapse - Past Is Prologue

Tyler Durden's picture

The following rather stunning documentary provides a critical insight into what Europe (and Argentina once again) could well be progressing towards. There is a reason we highlight the 'scariest chart in Europe' as that of youth unemployment and with the central banks printing money at ever increasing paces and the next round of global competitive devaluation beginning, the debt slaves will suffer ever more. In 2001, Argentina collapsed; after many years of apathy in the country, the insurrection exploded. As TopDocumentary notes, the spontaneous revolt of 'faceless' people meant saucepans were being banged in every neighborhood.

What happened to Argentina? How was it possible that in so rich a country so many people were hungry? The country had been ransacked by a new form of aggression, committed in time of peace and in a democracy. A daily and silent violence that caused greater social disruption, more emigration and death than the terrorism of the dictatorship and the Falkland Islands war.

Ever since independence, almost 200 years ago, Argentina’s foreign debt has been a source of impoverishment and corruption and the biggest scandals. Since the first loan negotiated by Rivadavia in 1824 with the British Bank Baring Brothers, the debt was used to enrich Argentinean financiers, to control the finances and empty the country of its wealth.

This foreign debt always went hand in hand with big business, and with the complicity of nearly every government, from Miter and Quintana to Menem and De la Rua. The policy of indebtedness gave rise in Argentina to generations of technocrats and bureaucrats, who favored banks and international corporations over their own country. Educated at Harvard, Chicago, Oxford or Buenos Aires, their portraits hang in the official galleries.


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wee-weed up's picture

Exactly! Anyone who can afford it, and who does not buy gold tomorrow is a fool!

DoChenRollingBearing's picture

Just in the nick of time a magazine appears: American Hard Assets, I bought it yesterday at Barnes & Noble.  This is the US premiere edition, and it features (at least this edition) GOLD!  Lots of gold pictures ("gold porn") as well.

"Review of American Hard Assets":

CompassionateFascist's picture

Very nice review, Do Chen. But I would not be paying a premium for "proofs" or any other collectability thing. When the paper ponzi collapses, 1 oz. of silver or any other PM will be...1 oz. Won't matter how shiny it is. 

markmotive's picture

Everything is fine until it is not. And then it fucking implodes in an epic collapse.

Unexpected is what they'll say. Just like Argentina, Mexico, Russia...

I call it 'FORECAST FAIL'.

strannick's picture

Exactly! Anyone who can afford it, and who does not buy gold tomorrow is a fool!

and for those who cant afford it, buy .... silver.

Popo's picture

This is why educated Americans (and I mean historically educated Americans, which liberals apparently are not) own guns.


goldfish1's picture

Clive Maund has been consistently accurate to my view.

Gold Market Update By: Clive Maund -- Posted Monday, 11 February 2013 |

"The Big Story now is that there is evidence that powerful forces will be brought to bear shortly to support the ailing US Treasury market, which is close to crashing critical support, and those wielding the power will have no qualms about sacrificing either the commodity markets or the stockmarket to achieve this objective, if necessary.

We will look at the outlook for the bond market and stockmarket later, after we have examined the gold charts and indicators. On the 6-month chart for gold we can see that the time window for an upside breakout from the downtrend in force from last October is now rapidly closing, and the downtrend line and falling 50-day moving average, both close by overhead, looks set to force a breakdown soon from the lesser uptrend channel in force from December. The still bearish COT for silver does not help either, since it is unlikely that gold will go up without silver. The big question if gold does break down is whether the support at and near the high volume hammer low of early January will hold. It probably won’t, given the way things are shaping up, and if it doesn’t gold is heading down to the much more important support level at $1500.

Plan accordingly.

Jack Sheet's picture

Good link, thanks, but there are derivatives in play too which makes it maybe not quite as easy to manipulate Treasury yields as Maund states.

All Risk No Reward's picture

From the perspective of the gang banksters, Argentina's collapse was a deflationary event.

Their wealth bought MORE assets in Argentina after the collapsed it.

The gangster banksters are all about making their wealth go further.

Debt Money Tyranny

DoChenRollingBearing's picture

@ Compassionate  + 1 for reality check.  But, if there is a 20% chance we go off the cliff badly, that leaves an 80% chance we will be more-or-less OK...  A small amount in proofs is OK in my book if someone is a collector and derives pleasure from collecting.

QUANTITY of bullion is first, I do agree.

Al Gorerhythm's picture

Ahhh, Do Chen San. I like that your glass is always full.

MisterMousePotato's picture

Technically, a glass is always full, unless, I suppose, one is in outer space, but even then, it would full of a vacuum.

wintermute's picture

Gold is the wrong horse. Bitcoin is exponentially outperforming gold.

pbppbp's picture

I don't think you get it. Gold is a fucking Hard asset. The minute tshtf, your bitcoins will vanish. 

Tinky's picture

Right. And betting on the Ravens greatly outperformed both (who needs a timeframe?).

goldfish1's picture

The bookies won in that staged event.

TWSceptic's picture

BC isn't an insurance like gold. Right now it's not a bad investment per se, but it's a different animal. As an investment, I personally prefer something which is backed by more than just computer code.

Panafrican Funktron Robot's picture

"I personally prefer something which is backed by more than just computer code"

I agree, and it is a bit interesting that Bitcoin is considered so risky, but the "money" in our nation's banks are backed by computer code as well.  It's functionally exactly the same, except Bitcoin has less risk because there is no need for a currency hedge.

Redhotfill's picture

Harro pwease erriot!  Uh internet and cell towers go down when SHTF, how u get at your bitcoins sent fool when no internet or cell tower working shavagon?   Oh I see u just pull them out of your wallet.....  yes just like I'll trade somone some SLV shares too when I wanna buy something lol

LasVegasDave's picture

Go ahead and default already 

then you can dig your own silver out of the ground, grow your own crops, drill your own natural gas and oil, feed your own peeps

who needs money from evil foreign countries and banks

do it yourselves, assholes, and quit whining


MeBizarro's picture

US will fund their military empire which is the basis of the petrodollar and pay for the massive level of oil imports how exactly?  

LetThemEatRand's picture

"who needs money from evil foreign countries and banks"

The top .01% of the country who sign up the bottom 99.9% for the unpayable debt that the .01% turns into personal wealth and power.  It has nothing to do with enabling the "assholes" to extract silver, gas etc for their benefit.   

Banksters's picture

The central fucking bankers roll this way.   Incremental or precipitous destruction of currency is how they get all our shit. Math illiterate fucks, zoned out on teevee, cheese doodles and neurotoxic soda, don't get the former, but the latter is just too obvious.   Imagine telling someone, "hey asshole, I just took half of your wages and savings.  Those are fighting words.

Al Gorerhythm's picture

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

When it comes, not one man in a million ( a ratio that supplies less than the number of members of congress and hence the dilemma; liberty or rehash) will be able to convince a nation of dolts of the necessity to change course; to try something radical or perhaps rational. Not a single nation has changed their course, from Iceland to any member of the MENA uprisings to European bankrupts to South American destitutes. Not a single one of those nations with billions of people have argued or tested a philosophy of change. We are all doomed to a reality of having to deal with a philosophically devoid mass of entertained zombies.

We're fucked.

Midas's picture

All these things about Argentina may be true, but something that goes a long way toward explaining their problems is their allergic reactions to work.

Anyone familiar with the country want to disagree?

Anusocracy's picture

Hunter-gatherers seldom work more than one or two hours a day to survive.

That's probably what their descendants are comfortable with, too.

Rusty Shorts's picture

"Hunter-gatherers seldom work more than one or two hours a day to survive".

Where We Went Wrong - Daniel Quinn

Al Gorerhythm's picture

I've never had the pleasure of meeting an Argentinean. It would take two cases of beer to strike up a conversation of import with one as I don't speak Spanish but I find that beer always has a way of breaking down language and cultural barriers. Barriers of distance and culture aside, it strikes me that they are not as dumb or as lazy as you may think they are. 

In the first instance, they have experience of currency collapses. It seems a political pastime to destroy a person's savings, on a whim or as a strategy. Now, if I was in their shoes, I'd be asking the question: Why should I work for payment in a currency in which the value is going to be destroyed by some government fucktard, just so that they can keep their lifestyle whilst destroying mine? Why would I pretend to work if they pretend to pay me in a token that is redeemed worthless? 

Secondly, can you come over to my house? I have some tasks for you that will take but a couple of hours. I'll pay you with a Zimbabwean $200 trillion "note" if you can break it for me. Oh, what the hell! Go on, keep the change, I'm feeling generous.

Ghordius's picture

Argentina is a classical case of a country that was dollarized. For the common Argentinian, this means that saving is done in USD. And this makes their own national currency even more fragile

old story, this is just another repetition of it

if you don't believe me just look up how most people buy a house in Argentina - hint: lots and lots of USD cash is usually involved

look it up in wiki: Dollarization - belay that, I just noticed that the article was sanitized

Al Gorerhythm's picture

I know,. No arguments from me. The peso, the bolivar, the dollar, oceans of currency....... what's your point?

Ghordius's picture

what I mean is that this is a classic case of how a bigger (reserve) currency trashes a lesser, weaker currency

for Argentinians, the devaluation of their reserve currency was not felt immediately. until their national one was devalued, that is, and since their local currency is much smaller and it's not their "universal" saving currency, the effect is stronger, which leads then Argentinian savers to save even more in reserve currency, which strenghtens the big one and weakens the small one

Martin Wolf of the Financial Times brought it to the point in 2010: from memory, "the world is trying to deflate the US and the US is trying to inflate the world"

my point is this: in the realm of currencies, size matters. a lot

if the South Americans had a common currency, or, better, if they would use gold & silver as saving currency, then this effect would be weaker

TNTARG's picture

We should add other variables into the equation.

In 2012 Argentina's trading balance sheet was positive, 26% higher than in 2011.

I thing the concept "currency war" suits better to understand the matter. See, as european countries can't devaluate, almost everybody but Germany have red figures. We all have seen charts about it right here and everywhere.

Germany trading balance has increased 3,4% in 2012 (1,097 billion euros) at the expenses of the rest of eurozone's countries, specialy southern ones. Things would be different if Italy, i.e., could devaluate.

As for Argentina, we traded mostly with China, Venezuela, India, Japan.

(forgive my poor English).




Ghordius's picture

btw - from the article "The following rather stunning documentary provides a critical insight into what Europe (and Argentina once again) could well be progressing towards"

is it so? europe hasn't this kind of debts in foreign currencies - historically a major difference

further, the eurozone is progressing versus balanced budgets and it still has a slight export surplus

the question is more: what could happen to the UK? but even then, it's debts are in Pounds, not in Dolares

MachoMan's picture

Are we even sure about the size and currency of debts any more in this world of off balance sheet debt and currency swaps?  We can talk about individuals' debts in regard to a particular currency (iceland consumer debt), but I'm not sure we can speak for the collective any longer (greece).

Panafrican Funktron Robot's picture

You bring up a not very often thought of point here; the official balances are scary looking enough, but when you introduce that much leverage onto that system, then yeah, even a default of a country that makes Greece look big by comparison (Cyprus) ends up being scary shit.  

Another way of thinking about it is what I call "dusty dominos", where you have the big countries as the dominos on the table, and the small countries as collections of dust surrounding those dominos.  Absent leverage, these small countries don't represent a threat to knock over or even wobble the dominos.  At present leverage, those collections of dust turn into big piles of dirt that, if pushed even a little bit in any one direction, could easily topple one of the dominos and start the chain reaction.  

The bad news, of course, is that it's ultimately not the dust that will get us; one of the dominos (Japan) is very close to tipping over.  The sheer destruction that will result just in forex trading alone will necessitate a G-7 coordinated action that we haven't seen since Bretton Woods, if they're lucky enough to still have their shit together.

fickle1's picture

Over the past 30 years, I've set up businesses in various places in Asia, Australia, Japan, in the US and in the UK, and lived extended periods in each location.

People in the US, like most western countries, are not particularly productive. They work the hours, and they are clever, but most jobs produce little real output.

The top paying jobs mostly involve making decisions and moving paper and money around - a lot of "marketing" and "services" and "management" and "facilitating" but not much actual production. This, and not wage disparity, is the reason I have moved my software development business to Asia.

The reality however, is that it's "productive" hours, not total hours, that feed and house a population and supply the population with their toys. It's not necessary for the entire population to work a 40 hour week to eradicate poverty. It's also not necessary for every family to have 2 cars, and a 5,000 sq/ft house.

Some people believe the smart man is the one that lowers his expenses, and then works just a 20 or 30 hour week, while spending the rest of his time on more enjoyable activities.

Call that allergic to work if you wish...

Midas's picture

I'm surprised nobody with actual knowledge of Argentina responded.  I have been there several times and spent several months there. 

Lunch lasts for hours, which then bleeds into siesta time after which you do some work to build up an appetite for one helluva big piece of steak that will take hours to eat.

I'm not passing judgement on whether or not that is how a person should live, but I wouldn't expect a 1st-world lifestyle without putting in the hours.

My Argentine banker friend describes it as a first world country that spends 10% of its time in the third world.  And if you are wondering, I absolutely loved every minute I spent there.

Redhotfill's picture

Yes except that the real progress made in that place was by the italian and germans who moved there.  All the Argentines I know are not work brittle.

fattail's picture

I always  thought it  looked particularly feckless to be  banging pots and pans, and  i thought  to myself "why do they bang pots  & pans??"

Because they Don't have Bushmasters!!!


lolmao500's picture

And those people are UNARMED...

Now just imagine the USA with the nazi cops, nazi politicians and an armed and divided population will do...

People have seen again and again how peaceful protest doesn't do shit. Did peaceful protest end the drone strikes? Guantanamo? Put politicians, cops and banksters in jail for their crimes? End the wars? End the police state? Fuck no. So what's left when there's no peaceful way of changing things?? The only way left is violence. These tyrants only understand one thing : FORCE.

The US will be a real war zone before long.

flacon's picture

The baby boomers will be sitting around a camp fire drinking beer and singing: "Don't fear the reaper" watching episodes of M.A.S.H. and dreaming of Jeanie. 

espirit's picture

Nah, we're still stackin', loadin' rounds, and buryin' beans.

Can't make it too obvious you're cutting shooting lanes.

THX 1178's picture

A few of you are. A very few. I think the internet generation is more awake than the baby boomers.

RockyRacoon's picture

I think the internet generation is more awake than the baby boomers.

Yeah.  I see 'em every day with their noses stuck to their iCrap -- usually playing some game or updating their Facebook status.

Really "aware".

Some of us old farts have actually been in a war.

What's going on right now is not new, just new names and faces.  Well, some old names actually!

Lord Of Finance's picture

Here me now, and you will all me believe later.


  The WWII generation is rightfully known as the greatest generation. 


  Their  grandchildren will be known as the worst.





Yeah. Noses in their iCrap with their heads in their ass.

Anusocracy's picture

"The WWII generation is rightfully known as the greatest generation."

Actually they were as shitty as just about every other generation.

Why do you think they are better than generations that didn't have a WWII? It is a glaring sign of a failed generation.

WhiskeyTangoFoxtrot's picture

Word, but this intra-generational fighting is not productive. Greatest generation or not, a bunch of them fought bravely, and a bunch of people (of all ages) may once again be required to fight bravely. Let's focus on the task at hand and not let them divide us.

Anusocracy's picture

A great generation would be one able to resist the evilness and stupidity of their leaders.